July 18 (Bloomberg) -- U.K. retail sales rose for a second
month in June as discounts at department stores drove demand for
clothes and electrical products.

Sales including fuel rose 0.2 percent from May, when they
surged 2.1 percent, the Office for National Statistics said
today in London. That’s the first consecutive increase since
July 2012. The median forecast of 20 economists in a Bloomberg
News survey was for a 0.3 percent gain. From a year earlier,
sales increased 2.2 percent.

The report adds to signs that Britain’s economy is
recovering after surveys of services, manufacturing and
construction all strengthened last month. At the same time,
consumer confidence is rising and unemployment data yesterday
showed jobless claims fell the most in three years in June.

“This rise in retail sales probably has some legs,” said
David Tinsley, an economist at BNP Paribas SA in London and a
former central bank official. “Consumer spending broadly can
help the current run-rate of GDP growth move higher.”

The pound pared its decline against the dollar after the
data and was trading at $1.5198 as of 10:30 a.m. London time,
down 0.1 percent from yesterday. The yield on the 10-year U.K.
government bond fell 3 basis points to 2.26 percent.

GDP Boost

In the second quarter, retail sales rose 0.9 percent from
the previous three months, the statistics office said. Retail
sales account for about 5.7 percent of the economy and the
second-quarter increase equates to a contribution of 0.1
percentage point to gross domestic product.

The National Institute of Economic and Social Research
estimates GDP rose 0.6 percent in the quarter through June. The
Bank of England, which left its bond-purchase program unchanged
this month, is reviewing how it might use forward guidance as a
tool to help bolster the recovery. It will publish the outcome
of that review next month.

Excluding fuel, retail sales rose 0.2 percent in June from
May and increased 2.1 percent from a year earlier, today’s
report showed.

Department-store sales increased 3 percent, the most since
March 2012. The ONS said there was an increase in promotions and
consumers bought “more clearance items across a range of
products, including clothing, electrical items and household
goods.”

Food sales fell 0.1 percent in June from the previous
month, while textiles, clothing and footwear declined 0.3
percent. In that category, clothes sales were little changed.

‘Strong Start’

The average weekly spend on retailing in June was 6.9
billion pounds ($10.5 billion), according to the ONS. That’s up
from 6.8 billion pounds in May and 6.6 billion pounds in June
2012. Sports Direct International Plc said today it has seen a
“strong start” to the fiscal year, with “trading ahead of
management’s expectations.”

The annual retail-sales deflator, a measure of changes in
shop prices, rose to 1.7 percent in June from 1 percent in May,
the highest since April 2012, the statistics office said.
Excluding auto fuel, the deflator was also 1.7 percent. The
deflator on food was 3.4 percent.